The Ministry of Business, Innovation and Employment (MBIE) has published new procurement rules (the Government Rules of Sourcing) that will replace the existing Mandatory Rules for Procurement by Departments on 1 October 2013. MBIE will run a series of seminars on the new rules in June. The new rules have been endorsed by Cabinet.

To a large extent, the new rules will not change the substance of the current procurement rules, given that the current rules reflect New Zealand's international trade commitments (such as the P4 Free Trade Agreement). However, the new rules add considerable detail to the conduct of procurement processes and are intended to improve the way in which the rules are expressed and provide additional guidance and examples for how the rules are to be applied. The rules encourage better commercial practice by emphasising early market engagement and ongoing open dialogue with suppliers to achieve greater value for money.

The new rules are broken down into 6 chapters which deal with:

  • The application of the rules (chapter 1)
  • Planning the procurement (chapter 2)
  • Approaching the market and evaluating responses (chapter 3)
  • Awarding the contract (chapter 4)
  • Types of supplier lists (chapter 5)
  • A description of the other rules and mandatory requirements which apply to state sector procurement (such as the requirements to participate in All of Government contracts, ICT common capability contracts and other related procurement policies) (chapter 6).

Chapters 1 to 4 do not change the substance of the current procurement rules other than:

  • The introduction of an obligation for each agency to implement the five principles of government procurement - rule 1. The principles apply to all procurements, even if the new rules do not apply (to see MBIE's summary of these principles click here)
  • Agencies must openly advertise contract opportunities unless one of the rule 15 exemptions apply. These exemptions are similar to the appendix 2 exceptions to open tendering in the current mandatory rules but some exemptions have additional requirements, for example the exemption relating to "additional goods or services". The new rules include a new exemption relating to "Unsolicited Unique Proposals". The new rules require exemptions from open advertising to be documented in more detail – rule 15
  • Chapter 2 requires agencies to submit to MBIE Strategic Procurement Outlooks, Annual Procurement Plans, Extended Procurement Forecasts and "significant business cases" - rules 16 to 19
  • An agency must not make it a pre-condition of participation in a tender that a supplier has previously been awarded a contract by a named buyer or a New Zealand government agency - rule 25(4)
  • Providing greater specificity as to what amounts to "sufficient time" for suppliers to respond to a Notice of Procurement, including specific minimum time periods for suppliers to respond to tender documents and specific restrictions around accepting late proposals - rules 26 to 31
  • Providing greater specificity as to what must be included in a "Notice of Procurement", eg the performance measures suppliers will need to meet, pre-conditions to participating, all evaluation criteria the agency will use to assess the proposals, and an indication of the relative importance of each evaluation criterion
  • Rule 31 recognises "competitive dialogue" as an option in multi-step procurement processes and indicates a Guide to Competitive Dialogue will be available
  • Agencies must promptly reply to all questions - rule 37
  • The introduction of e-auctions (a web based process whereby suppliers bid against each other on price, quality or another quantifiable criteria).

Chapters 5 and 6 provide much of the new content for the rules. These chapters cover:

  • The setting up of registered and pre-qualified supplier lists - rules 51 to 53
  • Panel contracts - rule 54
  • The differences between and rules applying to AoG, syndicated and ICT common capability contracts - rules 55 to 57
  • The requirements for setting up Public Private Partnerships (PPPs) - rules 62 and 63
  • The core requirements of other government procurement policies that apply (such as web standards - rule 58, guidelines for the treatment of IP in ICT or public service research contracts - rule 61, gateway reviews – rule 64, and the New Zealand Timber and Wood Products policy - rule 65).

There are no material changes to the substance of following existing rules:

  • The agencies to which the rules apply (government departments, New Zealand Police and New Zealand Defence Force) must comply with the rules, wider state services agencies are expected to have regard to the rules and wider state sector and public sector agencies are encouraged to have regard to the rules - rule 6
  • The minimum threshold when the rules apply (ie where the maximum estimated value of the goods and services exceeds $100,000, or $10,000,000 for construction) - rules 7 and 8
  • The types of procurement to which the rules do not apply (eg employing staff, gifts or statutory or ministerial appointments) - rule 12.

To read the new Government Rules of Sourcing click here.